Bulls n Bears Daily Market Commentary : 13 April 2022

Wed Apr 13 17:27:31 CAT 2022

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Bulls n Bears Daily Market Commentary : 13 April 2022

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ZSE commentary

The ZSE closed with gains as heavyweights roar to record highs with significant gains across the board headlined by blue-chip counters. Activity levels were at 696 trades. Econet was the most active stock at 58 trades followed by Delta and OK Zimbabwe at 36 trades each. Market bias was positive as 34 stocks gained against 3 losers while five (5) of the active stocks remained unchanged. ZIMRE Holdings anchored volume aggregate trading 1,042,700 shares and Hippo anchored value aggregate with a value of ZW$128.04 million.

The All-Share Index closed 9.22% higher at 21,077.08 points. The Top 10 Index added 9.57%. The Top 15 Index also added 9.87%. The Medium Cap Index was up by 8.22% to 33,987.47 points whilst the Small Cap Index added 5.21% to 473,776.65 points. Leading the risers pack of the day was African Distillers  adding 20.00% and Tanganda up by 19.17%. Ecocash Holdings gained 18.66% and TSL Limited gained 17.86% to 13200c. Seed Co Limited was up by 17.46%. Mitigating the gains were losses in First Mutual Properties and ZB Holdings which shaded 7.55% and 0.72% respectively. NMB Holdings was down by 0.69% to 2,048.18c. The Old Mutual Top Ten ETF closed at 850.70c up by 0.79% and the Morgan & Co Multi Sector ETF shaded 2.43% to 1550.60c whilst the Datvest Modified Consumer Staples Index shaded 1.26%. On the VFEX, Padenga and Bindura traded 21,294 and 230,157 shares respectively to close unchanged. wealthaccess

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Namibia

Namibia Follows South Africa in Hiking Rate on Inflation Worries

Namibia’s central bank lifted its key interest rate for a second straight meeting to safeguard its currency peg with South Africa’s rand and help counter inflationary pressures stemming from Russia’s invasion of Ukraine. 

The monetary policy committee increased the rate by 25 basis points to 4.25%, Governor Johannes !Gawaxab told reporters in the capital, Windhoek, on Wednesday. That follows a hike in February that started unwinding some of 2020’s extraordinary monetary policy stimulus that was aimed at supporting an economy ravaged by the coronavirus pandemic.  

The move comes in the wake of a decision by the South African Reserve Bank last month to raise borrowing costs by a quarter-point. The arid southwest African nation forms part of a common monetary area with South Africa, with the rand legal tender and monetary policy and foreign-exchange rules often guided by the SARB’s actions. 

While inflation slowed in February to 4.5%, the central bank sees it averaging 6% this year, up from its previous forecast of 4.4%. That’s after supply shocks arising from the war in Ukraine fanned oil and food prices. Gasoline prices rose 11% in April.

“The monetary policy stance is also a step towards normalizing the current negative interest rate that is conducive to long-term economic growth,” !Gawaxab said.

While the hike should safeguard the nation’s currency peg, curb inflation and bolster the attractiveness of local assets to offshore investors as the U.S. Federal Reserve and other developed market central banks tighten monetary policy, it may temper an already fragile economic recovery.  

The bank left its economic growth forecast unchanged at 3%. 

International reserves stood at 40.8 billion Namibian dollars ($2.8 billion) at the end of March, compared with 43 billion Namibian dollars a month prior. That’s enough to cover 5.5 months of imports and sufficient to help maintain the currency peg, !Gawaxab said.

Nigeria

Naira Closes Flat at P2P as Binance Coin, Others Gain

The local currency closed flat against the United States Dollar at the Peer-2-Peer (P2P) window of the foreign exchange (forex) market on Tuesday, closing at N585/$1, the same rate it was exchanged at the preceding session.

At the cryptocurrency market, transactions closed bullish, unlike the previous day when things went awry after China announced fresh restrictions on crypto activities.

At the market yesterday, nine of the 10 tokens tracked by Business Post appreciated, with Binance Coin (BNB) appreciating by 3.9 per cent to sell at N170,067.18, while Solana (SOL) rose by 1.8 per cent to trade at N61,000.90.

Cardano (ADA) improved by 1.5 per cent to quote at N570.49, Ripple (XRP) went up by 0.9 per cent to sell at N428.62, Litecoin (LTC) rose by 0.6 per cent to settle at N62,715.55, while Dash (DASH) also moved upward by 0.6 per cent to sell for N59,704.83.

In addition, Dogecoin (DOGE) recorded a 0.5 per cent jump to trade at N82.31, Ethereum (ETH) appreciated by 0.4 per cent to quote at N1,728,600.00, Bitcoin (BTC) increased its value by 0.1 per cent to finish at N24,621,485.00, while the US Dollar Tether (USDT) lost 0.1 per cent to close at N596.97.

Meanwhile, the Naira strengthened its value against the American currency at the Investors and Exporters (I&E) window of the FX market on Tuesday by 0.09 per cent or 38 kobo to sell at N416.62/$1 in contrast to N417.00/$1 amid sufficient supply of forex to meet the demands of customers.

This helped to ease the pressure on the domestic currency at the trading session, also supporting the Nigerian currency’s fortification against the British Pound Sterling at the spot market by 69 kobo, closing at N541.56/£1 compared to the previously traded rate of N542.25/£1.

In the same vein, the Naira appreciated yesterday by N1.8 against the Euro to close at N451.86/€1 in contrast to the previous day’s value of N453.66/€1.

 <mailto:info at bulls.co.zw> 

Global Markets

Japanese yen falls to 20-year low as dollar outlook bright

The Japanese yen weakened past the 126 yen per dollar mark on Wednesday for the first time since 2002, while the euro was pinned at a one-month low as investors bought the U.S. currency after hawkish comments by Federal Reserve officials.

The prospect of fast and aggressive U.S. interest rate hikes and growing market expectations that the Bank of Japan will keep rates ultra-low in the near term have fueled the Japanese currency’s declines against the dollar.

Bank of Japan Governor Haruhiko Kuroda on Wednesday warned the recent rise in inflation driven by higher import costs could hurt the economy, stressing the central bank’s resolve to keep monetary policy ultra loose.

“The Fed’s hawkishness against the BoJ’s extreme dovishness will remain a clear headwind for the JPY over the foreseeable future—and it is not unreasonable to expect yen loses to continue to the 130 mark,” Scotiabank strategists said.

The yen led losers against the dollar with the Japanese unit weakening 0.8% to cross the 126 yen to the dollar level. It was trading 0.5% weaker at 126 yen in London.

Though U.S. monthly underlying inflation pressures showed some signs of moderation in Tuesday’s data, traders ramped up bets that the U.S. central bank will accelerate its monetary tightening measures this year.

“The dollar will continue to do well versus the low-yielders such as the euro and the yen,” said Kenneth Broux, an FX strategist at Societe Generale in London.

Against a basket of six major currencies, the dollar edged 0.1% up to 100.52, its highest since April 2020. It has gained nearly 3% so far this month and is on track for its biggest monthly rise in nine months.

Elsewhere, the kiwi was buffeted after the Reserve Bank of New Zealand announced its sharpest rate hike in two decades to curb inflation.

While the 50 basis point rise was larger than many economists had expected, it was within traders’ expectations, and policymakers tempered the move by not lifting their projected peak for rates.

The euro fell to $1.0821 overnight, its lowest level against the dollar in more than a month and hovered nearby at $1.0837 in London trading.

German lawmakers called for an embargo on Russian oil as soon as possible, which if implemented would further weigh on the region’s growth prospects.

The Australian dollar and the offshore Chinese yuan weakened slightly after a surprise plunge in China’s imports added to investor worries about weakening demand.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Global gold prices inch higher as Ukraine conflict lifts safe-haven bids

Gold prices edged higher on Wednesday as concerns of an escalation in the Russia-Ukraine conflict increased safe-haven bids for the precious metal, although a firmer U.S. dollar capped bullion's gains.

Spot gold was up 0.2% at $1,970.21 per ounce, as of 0748 GMT, after hitting a near one-month peak of $1,978.21 on Tuesday. U.S. gold futures were down 0.3% at $1,970.80.

"Gold is benefiting from some safe-haven demand this week as inflation fears grow, China growth stumbles and the war in the Ukraine gets set for round two," said OANDA senior analyst Jeffrey Halley.

Russian President Vladimir Putin described the on-and-off peace negotiations as "a dead-end situation" on Tuesday, while U.S. President Joe Biden said for the first time that Moscow's invasion of Ukraine amounts to genocide.

The dollar index firmed near May 2020 highs, making gold less attractive for overseas buyers, after reassurance from U.S. Federal Reserve Governor Lael Brainard that the central bank will stay the course on hiking interest rates. [USD/]

Although gold is considered a hedge against inflation and geopolitical risks, interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

"March inflation came in at up 8.5%, year-on-year, which is a 40-year high, inflation historically bullish for hard commodities," said Michael Langford, director at corporate advisory AirGuide.

"That being said gold has no attributable yield and in a high interest rate environment, will be less desirable relative to other asset classes. I see gold having some minimal upside but medium to longer-term more likely to fall in price."

Spot gold faces a strong resistance at $1,975 per ounce, according to Reuters technical analyst Wang Tao. [TECH/C]

Spot silver was up 0.7% at $25.51 per ounce, platinum rose 1.1% to $976.31 and palladium gained 2.6% to $2,386.29.

Oil prices extend gains with falling supplies in focus

(Reuters) - Oil prices extended gains on Wednesday after Moscow said peace talks with Ukraine had reached a dead end, heightening concerns of supply disruption, while weak economic data from China and Japan limited the rise.

Brent crude was up $1.62, or 1.6%, to $106.26 a barrel by 1418 GMT and U.S. West Texas Intermediate (WTI) crude futures gained $1.25, or 1.2%, to $101.85. Both benchmarks climbed more than 6% on Tuesday.

"The downside for oil prices is limited," said OANDA senior market analyst Jeffrey Halley.

The Russian comments on peace talks and U.S. President Joe Biden accusing Russia of genocide reinforced the view "the Ukraine-Russia situation will not be de-escalating any time soon," Halley said.

Russian President Vladimir Putin on Tuesday blamed Ukraine for derailing peace talks and said Moscow would continue what it calls a "special military operation" to disarm its neighbour. 

Crude futures also drew support from Russian oil and gas condensate production falling to below 10 million barrels per day (bpd) on Monday, its lowest since July 2020. 

The International Energy Agency (IEA) on Tuesday said it expected Russian oil output losses to average 1.5 million bpd in April, with losses growing to close to 3 million bpd from May.

Western sanctions against Russia and logistical constraints have hampered trade, people familiar with the data said on Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC), has said it would be impossible to replace expected supply losses from Russia and that it would not pump more crude. 

Reports this week of a partial easing of some of China's tight COVID-19 lockdown measures also underpinned oil prices on the basis they could lead to increased demand.

However, weak data from China and also Japan limited the oil price rise.

China's crude oil imports slipped 14% from a year earlier, extending a two-month slide, as strict coronavirus restrictions hit demand in the world's top crude importer. 

Japan reported its biggest monthly fall in core machinery orders in nearly two years, dragged down by a steep drop in demand from IT and other service companies. 

OPEC on Tuesday cut its forecast for 2022 global oil demand growth, citing the impact of Russia's invasion of Ukraine, rising inflation as crude prices soar and the resurgence of the Omicron coronavirus variant in China. 

OPEC expects global demand to grow by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast.

The Thomson Reuters Trust Principles.

INVESTORS DIARY 2022

Company

Event

Venue

Date & Time

Counters trading under cautionary

ART

Seed co Int.

Starafrica

Medtech

Turnall

Seed co

Invest Wisely!

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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